(Bloomberg) -- Ally Financial Inc. is doing away with overdraft fees as lawmakers scrutinize the charges and lenders rethink whether to keep levying them.
The company is joining other digital-only banks that don't charge overdraft fees. Senators scolded the heads of the six largest U.S. banks last week about overdraft fees, with executives touting low-fee account alternatives they're beginning to offer.
Read how Warren called Dimon ‘star of the overdraft show'
“Overdraft fees can be a major cause of anxiety,” Diane Morais, president of consumer and commercial banking at Ally said in an emailed statement Wednesday. ‘It became clear to us that the best way to relieve that anxiety was to eliminate those fees.”
Banking executives have said they're aware of the potential harm overdraft fees can do to low-income consumers, and are taking steps to alleviate the burden. In April, PNC Financial Services Group Inc. Chief Executive Officer Bill Demchak has called overdraft fees an “unsustainable revenue stream” as he touted a new product he said would help consumers avoid those charges, saying the change would save customers $125 million to $150 million annually.
Read more: Dimon Took Heat But Regional Banks Rely More on Overdraft
Ally's decision was reported earlier Wednesday by Dow Jones.
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